Imperial Rounding Error in Iraq

For students of the IMF vs. Chinese theories of economic development, I think the details of the Chinese struggle to keep its Congo copper project going in the teeth of Western disapproval strikingly illustrates some conspicuous and interesting differences.

For people who like a good anti-imperialist horse-laugh, there’s this: United States Secretary of State Hillary Clinton took a swipe at China in a June 11 press conference in Zambia, urging African nations to resist “new colonialism” and for foreign investors to practice “good governance”. “We saw that during colonial times, it is easy to come in, take out natural resources, pay off leaders and leave,” Clinton said in Lusaka, the Zambian capital, before flying off to Tanzania. “And when you leave, you don’t leave much behind for the people who are there. We don’t want to see a new colonialism in Africa.”

Although she didn’t mention China by name, officials traveling with Clinton said she wanted to stress that African countries should hold Chinese investors to the same standards that they apply to Americans and Europeans. Clinton said the United States didn’t want any foreign governments or investors to fail in Africa, but wanted to make sure that they give back to local communities. “We want them to do well, but also we want them to do good,” she said.

This declaration appeared at the same time that America’s most conspicuous post-colonial initiative in Africa – the bombing of Libya – was entering its third month with a cost approaching US$1 billion and no end in sight.
It was the same week that the world got another look at the US exercise of good governance in Iraq, courtesy of the Special Inspector General for Iraq Reconstruction. The George W Bush administration had airlifted $12 billion in cash into post-conquest Iraq. $6.6 billion – more than half – cannot be accounted for. It is now assumed that it was stolen, perhaps “the largest theft of funds in [US] national history”.

The LA Times reported: U.S. officials often didn’t have time or staff to keep strict financial controls. Millions of dollars were stuffed in gunnysacks and hauled on pickups to Iraqi agencies or contractors, officials have testified.

House Government Reform Committee investigators charged in 2005 that U.S. officials “used virtually no financial controls to account for these enormous cash withdrawals once they arrived in Iraq, and there is evidence of substantial waste, fraud and abuse in the actual spending and disbursement of the Iraqi funds.”

Pentagon officials have contended for the last six years that they could account for the money if given enough time to track down the records. But repeated attempts to find the documentation, or better yet the cash, were fruitless.

In the requisite ironic coda, it turns out that the billions weren’t even American taxpayers’ money. The US government pulled the cash from the Development Fund for Iraq administered by the Federal Reserve Bank of New York. The fund accumulated the proceeds from Iraq’s energy exports during the Saddam Hussein oil-for-food sanctions years for eventual disbursement for the benefit of its true owners: the citizens of Iraq.

Tough luck, Iraqi citizens.

If China decides to take the US fiduciary meltdown in Iraq as precedent for its overseas activities, the bar for “doing good” and “giving back” to the local community is going to be extremely low. For those keeping score, $6.6 billion is 66 million $100 bills. It is 72 tons of shrink-wrapped cash. It is the payload of three C-130 Hercules transports.

It is also the stated value of the Sino-Congolese infrastructure-for-copper agreement, trumpeted as the “deal of the century”.

The much-touted neo-colonialist Chinese penetration of the Democratic Republic of Congo , in other words, is roughly equivalent to an American imperialist rounding error.

Peter Lee writes on East and South Asian affairs and their intersection with US foreign policy.